Can Tech Earnings Reinforce Sky High Valuations?

Channel: Bloomberg Markets and Finance
Published: 7 hours ago

Description
Jan.27 -- James Cakmak, partner at Clockwise Capital, examines the state of the tech industry as the Nasdaq 100 sits at its highest valuation since 2007. He speaks on "Bloomberg Daybreak: Americas."



Transcript
Are we going to see the numbers in tech earnings to back up the valuations? Well, it's interesting! You know when you look at the evaluations, at least when you look at it from a historical context, only 4 % in history dating back to 1871 evaluations on average exceeded 25 times, earnings we're actually in one of those times where 60 % of the components within The snp are trading at over 25 times. ...
You look at tech. More specifically, you were not in absolutely nosebleed territory. At the moment, however, i think that what you're going to see is that evaluations are or approaching peak multiples because of the fact that there's really not new levers to be able to extract value from you know, aside from say, apple and amazon. You know when you look at the broader big tech category. I have to ask what i always ask when we start talking about tech - and that is, are we talking about hardware or software here or are we talking about semiconductors? Each may have its own kind of outlook going forward. Sure i mean the one i'm talking about the primarily the the tech companies that control the smp. You know the internet within the top, the top 10. You have the trillion dollar club, the big tech, and then you know the the other consumer internet. You know the high-growth companies underlying tech all right. If we're talking about companies like apple big china supply chain, how much of an impact could we see from the coronavirus and is that something that starts to get priced into the stock yeah, i'm not too worried about kind of these cyclical effects? You know it's more about you know. What advantage would industries continue to be secular when the advantage, then amazon apple, continues to be in a very favorable category, because you have two massive tailwind behind them to help leverage their existing infrastructure and their existing locked-in base? You have the 5g rollout which we saw what happened with 4g and i think 5g is gon na be even more impactful, and then you add on a i on top of that, you know, there's not too many other companies that have those type of advantage.

You know aside from say, amazon, so i think that you know looking at the corona bond. It'S it's. It'S gon na be a cyclical challenge, just like we saw last year with china with their number, so i'm not too worried about it. Last year we had said that apples going back to a trillion and won't look back. I think we can double down on that today.


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